2009 has been an incredibly interesting year. Here are six quick thoughts.
1. Economic gloom and recession began the year as the biggest issue; healthcare reform ends the year as the biggest issue. This year began with tremendous paralysis in the American economy and tremendous concern. While improvement may have been fueled in part by government spending and record deficits, the economic challenges that the country finds itself in does not for the moment seem to be the biggest issue facing the healthcare economy. Rather, for healthcare providers, healthcare reform has emerged as the overriding and perhaps foreboding issue of the year.
Concerns regarding the public option. There is substantial concern that a healthcare reform package that includes any type of public option will ultimately cause a substantial migration away from better paying commercial payors to Medicare-like payment. There have been estimates that a movement to a public option structured with Medicare plus 5 percent reimbursement would include almost 120 million people within 3-5 years. As Medicare or public option reimbursement is likely to be substantially lower than commercial reimbursement, this means a great percentage of patients upon which surgery centers actually make a profit would migrate to the plan and thus reduce profits. In the long term, this should be of great concern to surgery centers and to hospitals.
Practical alternative. A great letter to the Wall Street Journal summarizes my thoughts on healthcare reform fairly well. There, the writer quotes Al From’s op-ed piece and says:
“I (a conservative) am shocked to read Al From’s (founder of the Democratic Leadership Council) “Democrats Don’t Need the Public Option”) op-ed, Oct. 16), which makes more sense than anything I’ve heard from any of the Washington blowhards. His advice to drop the public option, require everyone to buy coverage, cut the pre-existing condition trap and tax Cadillac health-care plans would get most people’s support. Pass a bill like this, sign it into law and let’s move on.”
2. Stark Act, Fraud and Abuse and Anti-Kickback Statute developments. From a federal anti-kickback and Stark perspective, it has been a fascinating year. First, Stark Act changes which disallowed under arrangements agreements as well as disallowing pre-used leases and real estate arrangements became effective this fall. Second, there have been a number of settlements between the government and individuals and hospitals with respect to anti-kickback issues and Stark Act issues. This include settlements relating to the alleged overpayment to physician employees of a hospital in Waterloo, Iowa (in that situation, there was one gastroenterologist being paid approximately $1.8 million by the system as well as four other specialists that were being paid very well) and a fascinating South Carolina qui tam case involving hospital offers to physician specialists.
There, the government has intervened in the case against the hospital and the case is going to trial shortly.
These cases, plus recent comments by Charles Grassley stating that there is a backlog of nearly 1,000-2,000 qui tam cases for the government to review and decide whether or not to intervene in, indicate an increased sense that hospitals and centers must have very active compliance driven efforts. This is an area that, due to budget deficits and the political ease of attacking things that are “called” fraud and abuse, is extremely ripe for further government action.
3. Easy reimbursement is going away. A clear story this year has been the movement and aggressiveness of payors away from paying any sort of above-market reimbursement through out-of-network or small discounts from usual and customary charges. This movement is accelerating. ASCs can still be profitable without these big pockets of reimbursement but it is harder.
4. Physician-owned hospitals may not fare well under healthcare reform. Every healthcare reform bill still includes provisions that would substantially reduce the ability of new physician-owned hospitals to be built. This is a shame as this industry is an outstanding example of innovation in delivery of care. The strength of the model is finally being borne out by several different consumer report studies that show physician-owned hospitals as the best consumer option for patients in many states. This is a terrific validation of the efforts of the physician-owned hospital industry.
5. ASC Association and ASC Coalition. There is a great song in the Michael Moore movie Capitalism about Cleveland that says its catch phrase is “we’re not Detroit, we’re not Detroit.” There, it alludes to the troubling but better economic situation that Cleveland is in than Detroit. From an ASC perspective, we are fortunate to have some of the best political efforts of any physician- owned directive. Between the ASC Association and the newly formed ASC Coalition, the ASC industry is represented better than any other physician constituency. The similar catch phrase to “we’re not Detroit, we’re not Detroit” would for ASCs be “we’re not medical devices, we’re not physician-owned hospitals and we’re not health insurers.” These are all areas that are being attacked at a level more directly and profoundly than surgery centers.
6. Spine, bariatric and retina. Aside from the ongoing core strengths of surgery centers — orthopedics, GI, and ophthalmology — we are seeing the addition of spine, bariatric and retina, more general surgery, ENT and urology procedures to ASCs. In essence, there might not be flood gates opening of new volumes and cases to surgery centers, but there are possibilities and opportunities out there that surgery centers should continue to aggressively pursue.
ASC Conferences 2010
We have two outstanding surgery center conferences planned for next year. First, we have our 8th Annual Orthopedic, Spine and Pain Management Driven ASC Conference. This will be held June 10-12 in Chicago. We will, once again, combine great and interesting keynote speakers with a terrific amount of practical and focused guidance. This year we have lined up Ron Brownstein, the political director at Atlantic Media Company, and Joe Flower, a fascinating healthcare futurist, to both speak at the June meeting. The 17th Annual ASCs Improving Profitability and Business and Legal Issues will be held October 20-22 in Chicago. Should you have suggestions for a speaker or topic for either of the meetings, or just simply want more information about the meetings, please feel free to e-mail sbecker@ mcguirewoods.com.
Hospital and Health Systems Conference — April 2010
We are also involved in hosting a conference on April 13-14 for hospitals and health systems entitled “Improving Profitability and Business and Legal Issues.” This conference also highlights Ron Brownstein as a keynote speaker and will include several hospital CEOs as speakers as well as a number of terrific presentations. Should you have interest in this conference, please also feel free to e-mail sbecker@mcguriewoods.com.
We see 2010, for the healthcare industry, as a very interesting and a solid year. It is 2012 and beyond that we have greater concerns about.
Very truly yours,
Scott Becker
P.S. Please e-mail Scott Becker at sbecker@mcguirewoods.com to sign up for the free Becker’s ASC E-weekly, the Becker’s Hospital E-weekly or the Becker’s Orthopedic & Spine E-weekly.